Question

Each of the following independent events requires a year-end adjusting entry.

1. Paid $9,400 cash in advance on July 1 for a one-year lease on office space.
2. Purchased $3,300 of supplies on account on April 15. At year-end, $310 of supplies remained on hand.
3. Received a $8,600 cash advance on July 1 for a contract to provide services for one year beginning immediately.
4. Paid $3,800 cash in advance on February 1 for a one-year insurance policy.

Required
Record each event and the related adjusting entry in general journal format. The first event is recorded as an example. Assume a December 31 closing date. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Date	Account Titles	Debit	Credit
July 1	Prepaid rent	9,400
	Cash		9,400
Dec. 31	Rent Expense (9,400 × 6/12)	4,700
	Prepaid rent		4,700

Answer 1

Solution

SI no	Date	Explanation	Dr	Cr
(A)	1 July	Prepaid Rent	9,400
		Cash		9,400
	31 Dec	Rent	4,700
		Prepaid Rent		4,700
		(9700*6/12)
(B)	15 april	Inventory	3,300
		Supplier		3,300
	31 Dec	Cost of goods sold	2,990
		Inventory		2,990
(C)	1 july	Cash	8,600
		Service income		8,600
	31 Dec	Service income	4,300
		Unearned income		4,300
		(8600*6/12)
(D)	1 Feb	Prepaid insurance	3,800
		Cash		3,800
	31 Dec	Insurance exp	316.37
		Prepaid insurance		316.37